Apartments to buy and avoid, according to investment experts

High-rise apartments are considered the worst choice for budding investors.

Would-be investors have been seriously warned against buying an apartment by experts, with one calling it a “waste” of money.

Apartments can be appealing due to their affordability, but Propertyology head of research Simon Pressley said investors should focus on finding a low-maintenance, freestanding house or villa unit wherever possible.

“The rate of growth of an apartment compared to a house in that same location has a huge difference,” Mr Pressley said.

“Buying an apartment can be a waste of money. In a lot of cases you might be better off ripping up your money and putting it in the toilet.”

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High-rise apartments in the CBD are a “dime a dozen” and lack long-term growth.

While units in Albert Park dropped 34.9 per cent in the past 12 months to a median of $700,000, house prices rose 11.6 per cent to a $2.21m median in the same period, according to realestate.com.au data.

And even stronger unit markets, such as Essendon North where the property type grew 8.2 per cent to $464,300, were outperformed by a 38.5 per cent jump in house prices to $1.375m.

But smaller apartment blocks like 133/2 Gillies St, Essendon North, could offer small growth.

Infolio Property Advisors managing director Lauren Staley said the advice “land appreciates, properties depreciate” hadn’t changed, with houses showing their continued resilience over apartments amid the pandemic.

“From an investment perspective, we really try to get out clients to consider anything with land value,” Ms Staley said.

She said some apartments across inner Melbourne “used to have good value,” but had stunted due to increased development in blue-chip areas.

Art Deco blocks like 44/449-453 St Kilda Rd, Melbourne, were a better investment.

The retro appeal helps set the property apart.

“That’s not to suggest all apartments are bad – some perform well but you need to know what to look for,” Ms Staley added.

Better apartment investments were in a small boutique block, with a courtyard or some land, a car space or occupied street frontage so “you’re not facing a carpark”.

Desirable amenities such as parks, shops, cafes and beaches, and how many other apartments were in the area were other crucial aspects to consider.

The courtyard at 1/79 Barkly St, St Kilda, helped add value.

Beachside offerings like 4/104 Esplanade, Williamstown, were also more desirable than towering developments.

“Mid-century apartments and Art Decos generally outperform new developments because they have the architectural significance that separates them,” Ms Staley said.

“But if you’re a dime a dozen and the apartment is one in a block of 100, I can’t urge (buyers) against it enough.”

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